Internal Control Procedures

As an auditor, you have discovered the following problems with the accounting system control pro- cedures of Jims Supply Store. For each of the following occurrences, tell which of the five internal control procedures was lacking. Also, recommend how the company should change its procedures to avoid the problem in the future.

a. Jims Supply Stores losses due to bad debts have increased dramatically over the past year. In an effort to increase sales, the managers of certain stores have allowed large credit sales to occur without review or approval.

b. An accountant hid his theft of $200 from the companys bank account by changing the monthly reconciliation. He knew the manipulation would not be discovered.

c. Mark Peterson works in the storeroom. He maintains the inventory records, counts the inventory, and has unlimited access to the storeroom. He occasionally steals items of inven- tory and hides the theft by including the value of the stolen goods in his inventory count. d. Receiving reports are sometimes filled out days after shipments have arrived.